Chap. 7 Legal, Ethical, and
Tax Issues

Borders and Jurisdiction

Power

For laws to be effective, a gov. must be able to enforce them. Effective enforcement requires the power
both to exercise physical control over residents and impose sanctions on those who oppose.

Effects

Laws in the physical world are grounded in the relation between physical proximity and the effects,
or impact, of a person’s behavior. Characteristics of laws are established by the local culture’s
acceptance or rejection of various kinds of effects.

Legitimacy

the idea that those subject to laws should have some role in formulating them. In this instance, businesses
that use the web should be ready to deal with a wide variety of regulations as they expand business
into other countries.

Notice

The notice regarding one set of rules has been replaced by a different set of rules. People can obey and perceive
a law or cultural norm as fair only if they are notified of its existence.

Jurisdiction

Subject-matter jurisdiction

court’s authority to decide a particular type of dispute.

Personal jurisdiction

– in general, determined by the residence of the parties. People can voluntarily submit to a jurisdiction by
signing a forum selection clause. The state then has personal jurisdiction over the parties who signed the contract.

Jurisdiction in International E-com

the exercise of jurisdiction across international borders is governed by treaties between the countries
engaged in the dispute. Non-U.S. corporations can be sued in U.S. Courts and visa versa. Any
business that intends to conduct E-com should consult an attorney if any international issues arise.

Contracting and Contract
enforcement in E-com

Written Contracts on the Web

contracts are valid even if they are not in writing or signed. Although, certain categories of contacts
are not enforceable unless the terms are put into writing and signed by both parties. Firms conducting
international E-com do not need to worry about the signed writing requirements in most cases.

Warranties on the Web

any contract for the sale of goods includes implied warranties. Sellers can create explicit warranties. Sellers usually
post warranties in brochures or other advertising mediums about the product.

Authority to form contracts

Issues regarding who has authority to bind a contract can be a problem. In E-com, the online nature of acceptances
can make it easy for i.d. forgers to pose as others. Luckily, internet tech that makes forged i.d.’s easy to create also
providers the means to avoid being deceived by a forged i.d.

Terms of Service

detailed rules that are intended to limit the Web site owner’s liability for what you might do with info you obtain from the site.
A site’s visitor is held to the terms of service even if that visitor has not read the agreement.

Use and Protection of Intellectual
Property in Online Business

Web site content Issues

Copyright Infringement, is the unauthorized use of material that is covered by copyright law,
in such a way that violates the original idea. The idea contained in an
expression that is copyrighted cannot be copyrighted.

Patent Infringement, The stealing of an idea or an invention that someone already has the right
of credit to.

TM Infringement, The stealing of a symbol, graphic, or other type of illustration that someone
already has legal authority over.

Domain names, Cyber squatting, and name stealing

Cyber squatting

Cyber squatting is the practice of registering a domain name that is the TM of
another person or company in hopes that the owner will pay huge amounts to
acquire the URL. Cyber squatters can in turn charge high advertising rates from
the visitors that they attract.

Name Changing

A related problem is Name Changing which is an action of someone registering
a misspelled variation of well known domain names.

Name Stealing

Name Stealing can also occur when someone posing as a site’s administrator changes
the ownership of the site’s assigned domain name to another site and owner.

Online Crime, Terrorism, and Warfare

Online Warefare and Terrorism

today with terrorism and warfare looming, the internet is a battleground for this activity.
There are sites out there that provide detail in making certain weapons, discussion
groups that help terrorists recruit, and other evils that exist.

Online Crime

crime on the web includes theft, stalking, distribution of pornography, gambling, and
commandeering one computer to launch attacks on other computer. Law enforcement
agencies have difficulties combating many types of online crime.

Ethical Issues

Issues

web sites that conduct E-com should abide to the same standards of ethics that other businesses follow. If not damaged reputation and trust can result.

Privacy rights and Obligations

online privacy is continuing to evolve as the internet and the web grow in importance as tools of communication and commerce.
Laws currently have not kept pace with the growth of the internet. The degree of personal info that web sites can record about
visitors’ viewing habits, products selections, demographics can threaten privacy of those visitors.

Important Definitions

Jurisdiction

A gov.'s ability to exert control over a person or corporation.

Constructive Notice

Bargined-for exchange of something valuable, such as money or property.

Contract

Agreement between two or more legal entities that provides for an exchange of value
between or among them.

Breach of Contract

Failure of one party to comply with the terms of a contract.

Long-arm statues

state law that creates personal jurisdiction for courts.

Judicial comity

Accommodation by court in one country in which voluntarily enforces another
country's laws or court judgments when no strict requirement to do so exists.

Conflict of Laws

Situation in which federal, state, and local laws address the same issues in different ways.

Implied Contract

Agreement between two parties stating that a contract exists, even if none were signed or written.

Warranty Disclaimer

Statement indicating that the seller will not honor some or all implied warranties.

Authority to Bind

Ability of an individual to commit his or her company to a contract.

Interllectual Property

Term that includes all products of the human mind, including tangible/intangible products.

Copyright

A legal protection of intellectual property.

Opt-in

Personal collection policy where the company collecting info, does not use the info for any other purpose
unless customer specifically chooses to allow that use.

Opt-out

Personal collection policy where the company collecting info assumes that the customer does not object to
the company's use of the info unless the customer specifically chooses to deny permission.